FEWER than one in 10 small firms in Liverpool are using their legal rights to charge late payers interest, despite four in five businesses suffering from late payment.

Few firms have taken advantage of legislation introduced in 2002 to add 8% interest above base rates to invoices, within agreed terms of bus-iness.

Martine Catton, regional sales manager of business finance provider Cattles Invoice Finance, said the option has had “little” impact on the problem of late payments which cause so many headaches for small companies.

She said research among owner-managed businesses revealed that the main reason for not invoking legal rights was fear among small firms of damaging commercial relationships with customers.

She added: “When business owners rely on a small number of customers, building good relationships is crucial to commercial success, so it is understandable that small firms are not keen to add interest to outstanding debt and potentially jeopardise these relationships.

“Small firms are finding themselves in a lose-lose situation. If they do not take legal action they risk waiting 90 days-plus for payment of invoices. If they do, they risk ruining relationships and losing business.”